Creating the Modern American Fiscal State: The Political Economy of U.S. Tax Policy, 1880-1930
This paper is an initial draft of an early chapter of my dissertation. The dissertation, which is tentatively entitled “The Creation of the Modern American Fiscal State: The Political Economy of U.S. Tax Policy, 1880-1930,” investigates the multitude of forces that affected, and were affected by, U.S. fiscal policymaking at the turn of the twentieth century. More specifically, my project explores the questions of how and why the modern federal income tax emerged when it did, and what role tax policy played in the changing status of American statesociety relations. The hypothesis guiding my research is the contention that democratic pluralism – that is, a broad cross-section of the American population and not any one social or class group – predominated in implementing tax reform policies.
My dissertation consists of three parts. Part I is an intellectual history of the economic and legal theories undergirding turn of the century tax policy. Part II is an institutional history of the National Tax Association (“NTA”), one of the first volunteer associations to influence the development of early twentieth century U.S. tax policy. And part III will be a social history of the various interest groups such as church organizations, labor unions, and agrarian associations that struggled for a graduated income tax.
This paper is an early attempt at the first chapter in part I, the intellectual history. By examining the backgrounds and scholarship of two key political economists of the time period – Edwin R.A. Seligman and Henry Carter Adams – this paper argues that the historicist assault on laissez-faire principles prepared the groundwork necessary for a more active fiscal state. In illustrating how Seligman and Adams used their historical political economy to advocate for a new basis of taxation, both at the personal and corporate level, this chapter seeks to recover the historical roots of turn-of-the-century tax policy.